China and the World of Business • China Business and the World

London-based China hand and attorney Geraldine Johns-Putra makes a rational case against the thrust of China’s indigenous innovation policy over at View to China, and in so doing opens a barrel of invertebrates.

I am of two minds (as I think she is) on indigenous innovation. On the one hand, I would love to see China become a global innovation leader. On the other, I see the rhetoric around the policy drawing the nation away from addressing the issues that need to be solved before China can get there, including:

Should government or enterprise be the primary driver of innovation?

What is the role of universities vs. government vs. enterprise in conducting the primary research that leads to innovation?

Is China’s “indigenous imitation” approach to innovation merely a phase, or will it be chronic?

Is innovation being hampered by the way banks allocate capital?

To what extent are China’s own innovators being driven offshore – or away from innovating – by loose IPR protection?

How do we focus on creating the truly novel and useful rather than simply reinventing the wheel (i.e., TD-SCDMA and the Godson chip?)

Where is the nexus between national priorities, global challenges, local capabilities, and commercial opportunity that would be the most fruitful fields of endeavor?

Where are other countries dropping the ball, particularly after over a decade of cuts in R&D in major Japanese, North American, and European companies?

And the tough one: to what extent is “indigenous innovation” merely a cover phrase for import substitution?

China is not alone in its discomfort with paying for foreign technology. The idea that key domestic industries should be held hostage to absentee technology landlords who demand hard cash merely to use their inventions was as odious to American policymakers a century ago and to Japanese leaders in the 1930s as it is to the leaders of South Korea and China today.

It is as upsetting for China to watch so much of its national purse flow into the pockets of foreign companies for intangible inputs as it is for Americans to see their national treasure siphoned into the purses of the OPEC nations. The rational response is some form of substitution.

We, as non-Chinese, need to appreciate that rather than vilify China for its refusal to support techno-rentiers, we should instead be driving a meaningful discussion on how “indigenous innovation” can be made to work not only for China, but for the world.